The Australian dollar is hovering around a new 5 month low today after a less than enthusiastic tone from the Reserve Bank of Australia in a statement released earlier today.
At 2.44pm(AEDT) the Aussie dollar was trading at US75.39c down from US75.51c in yesterday’s trading session.
In the latest minutes meeting the RBA noted that although the jobs market showed a slight improvement with the unemployment rate falling to 5.4 percent, the growth in wages was a major concern and is likely to be under pressure for some time.
This is likely to keep inflation below the central bank’s target rate which means no rate hikes are forthcoming
“Although unemployment rates had continued to fall, wage growth had been slow to increase in many economies and core inflation had remained low,” the RBA said,
With rates now seemingly on hold for an extended period of time, some analysts are predicting the Australian dollar could plunge another 10 percent as we enter next year as investors seek out currencies with higher yields which the Aussie dollar was once favored for.
"In the past, when emerging markets were doing well, people were buying the Australian dollar. It is no longer going to work like this. We are going to see that break simply because there is no yield." said Hans Redeker, the London-based chief global currency strategist at Morgan Stanley
Investors are going to shop around the globe and seek out "super attractive" real yields, he added.
Mr Redeker has a target rate for the Australian dollar of US67c in 2018 and predicts further falls to US65c in 2019.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|